Foreclosed residential units appear to be attractive options for buyers looking to own new properties, but as enticing they can be, interested buyers should always proceed with caution and make necessary research before agreeing to a transaction and writing checks. Properties are foreclosed for certain reasons including failure or refusal of occupants to settle their […]

Foreclosed residential units appear to be attractive options for buyers looking to own new properties, but as enticing they can be, interested buyers should always proceed with caution and make necessary research before agreeing to a transaction and writing checks.

Properties are foreclosed for certain reasons including failure or refusal of occupants to settle their financial obligations. So unlike conventional procedure of acquiring a residential property, this is a special case that needs a special attention.

As part of due diligence on the part of the buyer, here are some questions that he or she should ask the agency responsible for disposing foreclosed properties:

(Have pen and paper handy to jot down notes.)

Is the property currently occupied?

This should be the first question to ask. A “no” would be more straightforward, but a “yes” puts you as a buyer in a precarious situation. While it is assumed that occupants will be leaving, that remains as an assumption unless it becomes a reality. So what is the assurance a buyer can get? If at this point there is uncertainty, take a pass on this property and look elsewhere, and you’ll be out of trouble.

Does the property have clean title?

Getting the assurance that you are about to purchase a property sitting on a legitimate title helps you obtain a certified true copy at the registry of deeds along with a previous version, if any, that was overridden by the current one by virtue of change ownership, and mother title.

What is the payment terms?

One drawback of foreclosed properties is that they’re not brand-new and the condition of the house could deteriorate a bit. So you might expect to get some compromise in terms of payment terms to offset expenses for minor renovations. Get to know how much is the minimum down payment, length of payment, interest rates, monthly amortization and other money-related matters.

Can you describe this property?

As a buyer you’d like to acquire a house that fits your needs. Does it have a parking space for your car? How many bedrooms does it have? Is it a townhouse or a multi-door apartment? Getting as much information as possible — like photos, vicinity maps and nearby facilities — if visiting it in the short term is not possible — can give a clearer idea if this property suits your requirements in size, location, accessibility and other factors. Otherwise, it may just be best to move with the next available property being offered.

Are there outstanding taxes payable?

There are several tax considerations when you acquire properties and it’s important to know who will shoulder them. This includes capital gains tax, which is imposed on sale of assets at 6% of gross selling price, documentary tax, real property tax and creditable withholding tax, which is withheld by the buyer or withholding agent from payment to the seller for the sale of the seller’s ordinary asset/services. Not only this gives you an idea who is paying what, but also by how much and is the buyer inheriting outstanding tax dues or not.

This is a helpful step to be aware of what else should you be paying, anticipating that one big reason for the property foreclosure is that the occupants failed to pay dues in a timely manner and arrears and penalties have accumulated since. Seller likely will disclose this information but make sure to remind if you haven’t been told about it.

Are there other fees to pay besides taxes and advertised property value?

As the property you’re about to acquire has foreclosed so there are financial issues involved that led to such situation, you should particularly pinpoint outstanding payments and arrears that were not paid by previous occupant. Payable arrears also depend on type of property you’re looking at. For example, condo unit owners might get charged with monthly dues computed by floor area, or association or maintenance dues owed from property owners living in villages or subdivisions.

Are there arrears in utilities?

Unpaid electricity bills could mean the unit is a candidate for disconnection, if not yet disconnected from the grid, and requires extra money and time to get them restored. If not, maybe the unity was not yet occupied and no utility connections like water, telephone or electricity has been installed yet, so check this as well. If electricity/water connections are not available, ask how much would it normally cost for a connection to become available for your property.

When will the buyer be given authority or take control of the property?

Will it be enough when he or she pays the down payment or once he or she gets hold of the updated certificate of ownership? The earlier the owner gets the key to the property, renovation can start earlier if one is necessary, and property can be leased to tenants or become ready for occupancy. This also helps you, as a buyer who may have taken a loan to finance the acquisition, make use of the property investment and move out of your current dwelling to save costs.

Around how much is the rental rate in the area for this type of property?

If you are planning to acquire the real estate property and convert it as an investment vehicle, it will be good to get an idea how much is the prevailing rental rates, so you can better decide to take this route, or even consider proceeding to buy this foreclosed property to begin with.

How old is the property?

Having an old property is a double-sided perspective. If it is old and visibly needs thorough renovation, its price should reflect such condition. On the other hand if it’s built for a number of decades but looks durable, it’s an indicator of good structural condition and requires minimal maintenance work, enabling you to save on repairs for the long term. That is why a physical visit should be done for properties that are not built recently.

Is the property accessible?

If you are not familiar with the neighborhood, or live far away from the property, get a vicinity map, or pay it a visit to experience how long does it take to the place from public transport hubs (bus or jeepney stop or highway), public infrastructure such as hospitals, church, market and steady source of water or no power shortage.

Initially you’ll have a bias against it since you can’t help but compare it with your current property, plus the foreclosed property is in decrepit condition after years of neglect and lack of upkeep. But have a neutral mindset, since most likely, you have not yet discovered its inherent advantages or you are already used to the disadvantages of your current residence (scheduled brownouts, dimly lit streets or one-hour commute to work).

Is there anything I should know but failed to ask?

Foreclosed properties may have other factors outside of the house. Was there an unsolved murder case or former resident who committed suicide in the neighborhood? Is the place far from police station that robberies or burglaries in the neighborhood are a common incidence? Is it near a dump site or a factory that discharge toxic fumes? Or is it far from the pleasant neighborhood as advertised as it suffers from various forms of pollution?

Conclusion

Such due diligence on the part of a buyer is very important because in many cases properties are sold on a “as is where is basis” which means what you see is what you get. Get help from your future neighbors or assign someone to pay the property/neighborhood a visit if you can’t visit physically.

Have this copy printed out as you go through the details with an agent or selling party. Conversation should be very brief — less than half an hour — to evaluate if this foreclosed property is for you or not.

In case you are hunting for a new property in the market, one viable option to explore is Pag-IBIG Fund’s list of foreclosed properties. These list of properties offer distinct advantages being in line with market rates and a well-established route to acquiring properties in the Philippines. Through its website, Pag-IBIG Fund lists down a […]

In case you are hunting for a new property in the market, one viable option to explore is Pag-IBIG Fund’s list of foreclosed properties. These list of properties offer distinct advantages being in line with market rates and a well-established route to acquiring properties in the Philippines.Through its website, Pag-IBIG Fund lists down a list of foreclosed properties for scheduled bid for interested parties. Although the steps are relatively straightforward, it is understandable for first time bidders to feel confused on getting them right in their attempt. We’re hoping this article helps them proceed with their bid attempts with more ease.

1. Review the list of foreclosed properties for bidding But before you make your bids, you have to identify which property or properties you have an eye on acquiring. Visit the Pag-IBIG Fund’s Acquired Assets page and look for Schedule of Public Auctions section. Listings are grouped according to a city or provincial location.

One foreclosed property up for bidding is listed per row.

Item number – property counter used for easy reference when relating to the specific list of properties.

Property number – reference number to refer to the specific property.

Property location – the address of the property, usually specific down to phase, lot and block number in a barangay, city or municipality.

Type – the type of property.

TCT – Transfer Certificate of Title.

Lot area – the size of area of the lot of property in square meters. Certain properties such as condominium units don’t sit on a particular lot so this field has zero value.

Floor area – the size of area of the property in square meters.

Minimum bid – the lowest value of bid allowed for this part in Philippine pesos.

Appraisal date – the date which the property was inspected and assessed its value.

2. Perform due diligence from buyer
Since data provided in this document is limited — price, property type and floor area — it’s best to make due diligence once you have a property or properties you have in mind. This includes visiting the property itself and verifying the lot and floor area, evaluating its accessibility and environment in the neighborhood. For example, answer these questions: is it near the highway and easy to access through public transport or is the area easily flooded when it rains?

One caveat that commonly appears in Pag-IBIG Fund auctioned property listings is that they are “as is where is”. This means that properties are being sold with the buyer getting everything that comes with a property, at its present condition, good or bad. Leaking roof or rowdy neighborhood comes with the cost.

Another word of advice to prospect buyers: do not bid on properties that are occupied. Occupied properties can get complicated especially if occupants are unwilling to move out of the house.

Once you are certain that the property fits your desired conditions and financial consideration, it is then the right time to proceed with the bidding.

Note that there is a cutoff date on which you should come up with a decision and provide certain requirements.
In the example above, the date of bidding is September 20, 2017 for Cavite area listed properties. This means that you must have inspected the property and decided to proceed or not prior to that bidding day.

3. Prepare documentationInterested bidders are then invited to formalize their desire to acquire certain properties by providing the following requirements:

Filled out OFFER TO BID (HQP-AAF-103) (DOWNLOAD HERE), stating details of the property (TCT, location, phase, block, lot number, etc), along with details about the bidder (name, address, SSS, Pag-IBIG and TIN numbers, employer and address, etc). You may use PDFfiller tool to fill out data before printing. Print two copies once done.

Bidder’s Bond. As a bidder, you need to prepare a bidder’s bond which is equivalent to 10% of your bid amount for the property you desire to acquire. For example, if the minimum bid in the property item number 143 is P176,983.26, you may want to place your bid at P250,000 hoping nobody bids higher than that amount. The computed amount for bidder’s bond is as follows:Bidder’s bond = P250,000 x 10% = P25,000

The bidder’s bond can be in cash or manager’s cheque from any commercial bank, and made out to Pag-IBIG Fund. This amount shall be returned back to the non-winning bidder or serve as downpayment for the winning bidder for the property once the bidding process has concluded.

Envelope. This sealed envelope shall contain the filled out OFFER TO BID and Bidder’s Bond.

The Bidder’s Bond can be paid prior to the date of bidding, depending on the location. Typically this can be done at HDMF offices or member services branches. Just confirm with the Pag-IBIG Fund office supervising the foreclosed property bidding.

4. Attend the scheduled bidding day. Interested parties are encouraged to attend the day of bid at a pre-announced venue and time. Should you, the bidder, be unable to attend, you can appoint a representative. If so, get the following documentation:

Special power of attorney (DOWNLOAD HERE). This filled out document shall include details of bidder and representative, along with scheduled time, day and venue of bid, affixing signature of both notary public and bidder and bidder’s spouse, if applicable.

Acknowledgment. A notary public’s corresponding acknowledgment (with signature and notarial seal) of such appointment of representative.

5. Register at the day of bidding. On the day of bidding, have your presence acknowledged by registering in the entrance counter.

6. Announcement of winning bids. The bidder who offers the highest bid as determined by the Bidder’s Bond shall be declared the winner. But there are cases when highest bidding isn’t even the case when selecting winning bids.

In case there is only one bid brought forward, the bid is automatically declared winner.

In case two or more bidders have exact amount of bids, determining the winner can be done through the following process:
(a) Mode of payment – bidder who offers cash payment gets higher priority over one who offers on installment basis.
(b) Toss coin – if there are only two tied highest bids.
(c) Time of registration of bids – The bidder whose bid was brought forward earlier is declared winner.

7. If you won the bid. Your Bidder’s Bond worth 10% of your proposed bid will automatically be considered your downpayment of the property. The remaining 90% of the balance can be paid (unless you won the bid through tie-breaker and won via mode of payment) through the following options:

Cash – on which the approved purchase price shall be paid not later than 30 days after the receipt of notice of award.

Short-term installment – on which the approved purchase price and interest shall be paid in equal monthly installments not to exceed 12 months.

Long-term installment – on which the approved purchase price and interest shall be paid in form of monthly amortization up to 30 years with following considerations:(a) Loan approval and terms shall be subject to eligibility requirements under Pag-IBIG End-User Home Financing Program guidelines.
(b) The loan amount shall be the bidder’s offer, net of the 10% downpayment.
(c) If loan application has been disapproved, the 10% Bidder’s Bond shall be forfeited in favor of Pag-IBIG Fund.
(d) The buyer shall be required to file for Pag-IBIG Fund loan application and complete documentary requirements and pay incidental fees within 30 days of receipt of Notice of Approval of Sale: processing fee, equity (if applicable), one year advance in insurance premiums for fire and allied perils.
(e) If the Bidder’s Bond is higher than the assessed value of property, the excess amount shall be treated as equity. It shall be paid by the buyer within 30 days upon receipt of Notice of Loan Approval.
(f) Original borrowers who wish to join the public auction shall not be allowed to avail of housing loan and instead permitted only to bid through cash or installment basis.

8. If you lost the bid. If someone else offered a higher bid in the public auction, your Bidder’s Bond shall be returned to you, together with an acknowledgment receipt soon as a winning bidder has been declared.

9. If winning bidder fails to comply with conditions. In case the winning bidder fails or refuses to purchase the property, or fails to comply with payment conditions, he or she loses right as winning bidder and the 10% Bidder’s Bond shall be forfeited in favor of Pag-IBIG Fund.

Bidding for foreclosed properties in Pag-IBIG provides excellent opportunity to gauge market value of a certain location, even when you don’t proceed making a bid or losing out in an auction. However, a proper research trumps everything else and helps guarantee a property worth investing in. Failure to do so might lead to forfeiture of Bidder’s Bond especially when the winning bid realizes the disadvantages and hazards associated with the property in question and backs off from a deal.

Foreclosed properties offer opportunities for investors to spend their money, overseas Filipinos to fulfill their dream house or just about anyone who simply want to be in the market for reasonably priced properties. A foreclosure, by definition, is the instance when an owner of a mortgaged property is unable to pay full principal and interest […]

Foreclosed properties offer opportunities for investors to spend their money, overseas Filipinos to fulfill their dream house or just about anyone who simply want to be in the market for reasonably priced properties.

A foreclosure, by definition, is the instance when an owner of a mortgaged property is unable to pay full principal and interest payments, pompting the lender to seize the property, evict the homeowner and sell the property assuming its full ownership in the process.

While it’s definitely devastating to those who are forced to vacate their homes in favor of the creditor or lender in a state of foreclosure, it also presents an opportunity for would be buyers especially if the lender is looking to dispose the property sooner despite at lower than market rates.

In the Philippines, banks are usually involved in financing for home buyers, helping them acquire the property from a developer through mortgage terms. So naturally, when these buyers fail to honor their mortgage obligations, banks are at the forefront of foreclosure properties market.

Here are the banks, and their website links, that offer foreclosed properties in the Philippines.

Landbank Properties for Sale
Properties listed include a wide variety of types (residential, agricultural, commercial, industrial, etc). Has easy to navigate search form with multiple options such as location, price, floor and lot area.

Metrobank Properties for SaleA simple search form that allows users to search for property type, location (region, city or province), selling price, lot and floor area as well as Transfer Certificate of Title number.

BDO Properties for SaleIncludes listing of vehicles (model and brief description), chattels (product description) and properties (location and property type) that do not have sufficient information — several listings have no photos.

Foreclosed homes are great deals for anyone looking for a house. At times you end up buying an amazing house at incredible discounts. But when you set out to buy a foreclosed home, the procedure for doing that is different from traditional home sales. Here are a few tips to keep in mind before you […]

Foreclosed homes are great deals for anyone looking for a house. At times you end up buying an amazing house at incredible discounts. But when you set out to buy a foreclosed home, the procedure for doing that is different from traditional home sales.

Here are a few tips to keep in mind before you make an offer on a foreclosed property

The As-Is Sale: There are homeowners in foreclosure who are so disgruntled that they think they have nothing left to lose. Thus your to-be property is stripped off of anything even remotely valuable which includes door knobs, fixtures, light fittings among others.

If this is the case then the house will be sold to you in “as-is” state.

You can get a great discount on such a house but make sure that it offsets the cost of repairs

Not knowing what you are getting into: When you buy a home, more often than not good homeowners advice you on how to go about the place. If there is possibility of some serious damage then the homeowner is legally required to let you know beforehand.

But this is not the case in a foreclosure. So you have to be cautious and prepared for an unexpected adventure.

Don’t assume they’ll take any offer: A foreclosed home is a good bargain but do not expect the owner to accept any price.

To figure out the correct price of the place take a look at the recent sale prices for homes sold by lenders. These are known as real-estate owned sales.

It takes more time: You need to have a lot of patience before you set out to buy a foreclosed home. The reason is that when you buy a home from an institution the process of accepting your offer takes time as opposed to the time taken in accepting your offer when buying a traditional home.

A different kind of sale: To get a good deal you need to deal with the reduced attention you get from the real estate owners. This is because banks sell foreclosed homes through real estate agents and often these agents are dealing with a dozen foreclosed homes at a time. So they cannot give you dedicated individual attention.

Hire a good building inspector and go along with him or her to find out as much as you can before you buy a foreclosed home.